Data Says Money Might Buy Happiness, But Happiness Might Not Be What You Want

from the or-we've-just-defined-happiness-incorrectly dept

Another excellent podcast from the folks at Planet Money, this time an interview with economist Justin Wolfers, who’s been studying the data on money and happiness. First up, he debunks the previously held notion concerning money and happiness. A much older study had found that, within countries, people generally were happier with more money, but oddly that didn’t translate across borders: so people in “rich” countries weren’t any happier than people in “poor countries.” The classic explanation for this was that it’s all relative. People in poor countries are happy knowing that, relatively, they’re better off than their neighbors. It turns out, that’s simply not true — at all. The data (and Wolfers has a lot of it) doesn’t support that in any way and he offered a key experiment to prove it: if that were the case, wouldn’t those who were doing just okay in the US move to Mexico where they could be — relatively speaking — super wealthy compared to everyone around them… and wouldn’t those doing okay in Mexico not want to move to the US where, at least initially, they were likely to be much poorer than others? And yet, the reality doesn’t match up with that theory.

Instead, the aggregate data suggests that there’s a very strong correlation between wealth and happiness. People in wealthier countries are happier. People in poorer countries are less happy. Of course, this appears to be aggregate data and aggregate data can hide all sorts of important details. On top of that, this appears to be based on self-reporting levels of happiness, and some could question how accurate that is. Also, obviously, correlation does not mean causation, but it certainly can provide some fairly interesting tidbits of information. At the very least, there does appear to be some connection, at the macro level, between money and happiness. That said, the data does seem to show this across different levels of income as well. So, as he said, the data absolutely appears to debunk that once people hit a certain level of wealth their happiness stops increasing as their wealth increases.

However, as the interview continues, you realize that it’s a lot more complicated than just “money causes happiness.” Of course, when it comes to money and happiness, it should be no surprise that there’s a fair bit of complications. I won’t necessarily go through all of the details, but Wolfers points out that happiness might not really be the way people judge things — and even people, who are generally wealthy and consider themselves happy, might not be content in other areas of their lives. He notes that the specific question asked makes a really big difference. All of the data discussed above is about how people respond to surveys about their general level of satisfaction. Different questions — such as asking people how much they smiled the day before may result in different answers. In that case, the numbers of smiles increased with wealth, but plateaued at a certain level, beyond which people were smiled out.

But what the rest of the report suggests is the classic situation where correlation may be misleading: because there may be other variables that have impact. He notes that wealth can mean less worry, pain and stress — and that can lead to greater satisfaction. Towards the end, the interviewer, Adam Davidson, points out that for some people, personal happiness might not be that important. Instead, he points to examples of people he’s known from less-developed countries who put more value on family connections (and highlights two examples of translators who have worked with him — one in Iraq and one in Haiti — who came to NYC, and rather than be impressed by the city, were upset that “the people seem so lonely.”). Wolfers then asks: “is happiness what we really care about?” He then uses the widely discussed studies that have said that parents tend to be less happy than non-parents — and yet most parents say they would absolutely have their kids again if they were to do it all over again. He points out that many people find other important values, beyond happiness, in something like being a parent. For example, some people “find meaning” in it, even if it doesn’t make them “happier.” In other words, as Davidson suggests, perhaps people value things outside of just straight happiness.

I’m reminded of a fascinating article from last summer in New York Magazine that explored that relationship between happiness and parenting. It goes through all of the same data that Wolfers is clearly discussing, and for much of the article, leaves you thinking that being a parent is a pretty depressing experience. But towards the end, it notes that when you change the question around a bit, things become quite different. Parents in studies tend to say that their lives were more “rewarding” overall. That’s different than the “moment-to-moment” happiness that is often surveyed. At the very end, it notes some key significant findings that parents actually tend to be less depressed than non-parents — but that single fathers, who are often away from their children — can be the most depressed. As they note, if being a parent really makes you unhappy, being spared of that duty should make you happier, but it does not.

That article concludes, then, with a point similar to what Wolfers states above:

But for many of us, purpose is happiness–particularly those of us who find moment-to-moment happiness a bit elusive to begin with. Martin Seligman, the positive-psychology pioneer who is, famously, not a natural optimist, has always taken the view that happiness is best defined in the ancient Greek sense: leading a productive, purposeful life. And the way we take stock of that life, in the end, isn’t by how much fun we had, but what we did with it.

[…] “I think this boils down to a philosophical question, rather than a psychological one,” says Gilovich. “Should you value moment-to-moment happiness more than retrospective evaluations of your life?” He says he has no answer for this, but the example he offers suggests a bias. He recalls watching TV with his children at three in the morning when they were sick. “I wouldn’t have said it was too fun at the time,” he says. “But now I look back on it and say, ‘Ah, remember the time we used to wake up and watch cartoons?'” The very things that in the moment dampen our moods can later be sources of intense gratification, nostalgia, delight.

And, I think this highlights the key to the original question about the relationship between money and happiness. It almost certainly drives some element of happiness, which is important. But it — alone — may not be enough to drive a different kind of happiness. Wolfers and Davidson suggest these other things — meaning, spirituality, connectedness, altruism, etc. — are not happiness, but I’m not sure I agree. To some extent, going back to the economics of things, we define things in terms of marginal benefit, which is too often denominated solely in terms of currency. And that leads people to equate the monetary value to the “benefit.” But happiness lives at a variety of levels. There is the immediate forms of happiness, and there are deeper levels of contentment, including what Wolfers suggests above, as well as many other areas of life. I would argue that all of that — anything that creates long term benefit for the person — is a form of happiness, even if they might not judge it as such at the moment.

So, in the end, there still isn’t a good answer to the initial question: “does money buy happiness?” The answer is, in some ways, both yes and no. It may buy certain forms of happiness, but not others. And, in the end, it depends on what you measure in terms of what comes out in these studies and economists’ reports. Happiness itself is so vaguely defined that a slight change in the question will give you different answers. But, I think that most people — implicitly — have a measure of overall contentment that they consider, and while that might not equate to day-to-day happiness, perhaps people are starting to realize that the important things in life are not short-term happiness, but longer-term contentment.

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Comments on “Data Says Money Might Buy Happiness, But Happiness Might Not Be What You Want”

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Marcus Carab (profile) says:

There’s a pretty fascinating neurological aspect to this question too, which gets into how our brain handles the relationship between work and reward. One of the reasons a lot of people think short-term happiness is more important (and often sacrifice their long-term goals in favour of instant satisfaction – whether by procrastinating or partying all the time) is that it has a way more direct chemical impact on us: both short- and long- term happiness cause dopamine to be released in the brain, but only in cases of short-term happiness does our brain truly connect that reward to the initial activity. With long-term happiness we rely more on our higher reasoning abilities to connect the effort spent with the reward gained – and higher reasoning doesn’t have the same visceral, drug-like impact on our behaviour that our basic neurological circuitry does.

Of course, the effort-reward relationship mediated by dopamine is only one tiny slice of the picture.

vivaelamor (profile) says:

Re: Re:

“With long-term happiness we rely more on our higher reasoning abilities to connect the effort spent with the reward gained”

I wonder what impact academic success has on this. As far as long term goal/reward relationships go, school would seem to be a prime example at an important developmental point. Many people seem to end up drifting through school for the sake of it, which may be more than a waste of time in effecting their long term prospects.

Marcus Carab (profile) says:

Re: Re: Re:

Indeed. I think it is rather important in employment too. Once upon a time you worked all day then got a meal at the end. Then, you worked all day and got a wad of cash, which you spent on a meal. Then you worked all day for a week, and at the end got a wad of cash to spend on a meal. Now you work all day for a week to get a cheque that you put into a machine to make some little numbers go up that you can then later turn into cash to spend on a meal. And, increasingly, you cut the cheque and the cash out of the equation entirely.

The separation of effort and reward just keeps getting bigger and bigger, while the tangible connections (cash, a cheque, numbers on a screen) get weaker and weaker.

vivaelamor (profile) says:

Re: Re: Re: Re:

“The separation of effort and reward just keeps getting bigger and bigger, while the tangible connections (cash, a cheque, numbers on a screen) get weaker and weaker.”

I would suggest a good measure against that is budgeting. It might help if schools actually considered teaching the skill a priority. In my experience advanced mathematics gets a higher priority than the ability to understand a balance sheet or produce a financial statement.

Marcus Carab (profile) says:

Re: Re: Re:2 Re:

In Canada, about eight years or so now, they made “Civics” a mandatory class in high school – but just for one semester, I forget which grade. It covers a bunch of that kind of stuff. But we also split math up into elective levels – Practical, College and University (colleges and universities are different here – only the latter gives degrees). College and University still focus on academic math, but Practical, as the name says, focuses more on finances and accounting.

This all happened after my time in high school though so I can’t really say how effective it all is – but in principle it sounds good.

That being said, I think academic math education is important, I just wish was treated properly. I didn’t discover that I actually really liked math until I read a book on Fermat’s Theorem that my uncle gave me. This essay [pdf link] is a really, really awesome perspective on that. “A Mathematician’s Lament” – a must read that will rekindle your love of math if you have forgotten it 🙂

vivaelamor (profile) says:

Re: Re: Re:3 Re:

“That being said, I think academic math education is important, I just wish was treated properly.”

My personal experience was not an issue with disliking advanced mathematics, but an issue with the school’s inability to cater to my general learning needs. Had motivation and ability been the only factors then I might have ended up as a mathematician. Looking back though, budgeting may be less fun but far more widely useful than quadratic equations. Especially for those who struggled with the advanced stuff anyway and were less likely to learn budgeting by themselves.

ChrisB (profile) says:

Money does buy happiness

Without a doubt, I’m happier now, with a secure well-paying job, than I was 15 years ago as a struggling grad student. It is mainly that money eliminates the stress of living hand-to-mouth.

However, I think happiness is most affected by expectations. I’d much rather be slightly happy all of the time than really happy some of the time. This is the problem drug-addicts and over-eaters get into: they chase happiness but that only makes the lows lower. They have this roller-coaster of euphoria and depression. The sooner you can accept the fact that lots of time must be spent doing boring tedious things (laundry, dishes, waiting in line) the happier you will be.

Trerro says:

Time is money (just not in the way that's normally said)

If you’re poor, especially if it’s in a country where food isn’t a guarantee, most of your time is spent doing things like subsistence farming, causing you to spend more of your time working on simply surviving (subsistence farming, scavenging, etc).

If you’re rich, on the other hand, you can hire people to do the chores you don’t want to be bothered with, and since you’re not concerned with income, you can focus on what you really want to do in life – guaranteeing a meaningful job.

Marcus Carab (profile) says:

Re: Time is money (just not in the way that's normally said)

I was with you up until “guaranteeing” – I think it’s clear that people at every level of privilege are capable of squandering opportunities. Part of that is exactly what’s being discussed here: it’s not always easy to aim for long-term, meaningful goals, but it’s always easy to blow money on a quick thrill. And it’s painfully obvious that plenty of people do it, no matter how much money they have: there are massive substance industries ranging from ultra-cheap and dangerous street drugs up to high-priced cocaine, imported cigars and designer liquor. There are cracked out hookers on streetcorners turning tricks for twenties, and there are thousand-dollar-an-hour “escorts” being booked by private agencies.

So I wouldn’t say anything is “guaranteed” by wealth.

mooklepticon says:

Ugh, the definition of happiness is seriously important as well. The parent study resonates with me, as a new dad, because it’s all about definition. Having kids is significantly less *fun* than being childless, but I’m RIDICULOUSLY more happy. Changing a diaper isn’t fun. Having a child who needs diapers changed makes me happy.

I think that the biggest problem is that most of humanity, ESPECIALLY we Americans, don’t define or separate fun and happiness properly. It took me about 10 years to get the idea right and it was only by finding other people who had figured it out that I could as well.

So, that study on parents? Yeah, I’m much happier, significantly so, than I was before I had my kid. I think that the study would agree with me.

vivaelamor (profile) says:

Re: Re:

“I think that the biggest problem is that most of humanity, ESPECIALLY we Americans, don’t define or separate fun and happiness properly. It took me about 10 years to get the idea right and it was only by finding other people who had figured it out that I could as well.”

I’m reminded of that stupid ‘do blondes really have more fun?’ joke. The premise being that blondes might be better off (happier) because they’re having more fun.

vivaelamor (profile) says:

Re: Re: Re:3 Re:

“Darn. I was hoping you had an awesome blonde joke ;)”

I’m pretty sure the correlation of feminists and people who make blonde jokes weighs against me on that one. I suppose you could give Capitalist Lion Tamer the benefit of the doubt and presume they may also be referring to gay men, but in general the ratio of blonde jokes that implicitly refer to woman (often merely by stating ‘she’ in the punchline) seems rather high.

Which, as an increasingly aside point of note, would be less of an issue if our language wasn’t inherently sexist in allowing (and historically encouraging) ‘he’ as a generic pronoun.

vivaelamor (profile) says:

Re: Re: Re:5 Re:

“(and if there were an alternative to ‘he’ that didn’t totally break the flow of communication or marke it sound like you are equivocating, I would gladly use it!)”

I’ve never had any trouble using ‘they’ as a singular. I find it sad that rather than accept ‘they’ as correct, or add an extra word, those influencing the language decided to stick with ‘he’ as the only official correct choice. Use of ‘he’ was actually mandated in an act of parliament in 1850.

Contrast that with today where women have taken advantage of the freedom to choose in identifying as Ms rather than Miss or Mrs. But still we’re left with a legacy where even if everyone on the internet were a woman, it is quite possible that it would still seem to be dominated by men, for the apparent sake of grammar.

There’s an interesting book with a section on the subject, with diagrams!

Anonymous Coward says:

Re: Re: Re:6 Re:

Three steel workers sat down to lunch on a beam 30 stories high. As they opened their lunch pails, the first, of Mexican heritage, exclaimed, “No, not again! My wife packed burritos for the fifth day in a row! I swear, I have this lunch tomorrow and I’m jumpin’ offa here!”

The second worker, a sturdy Scot, bemoaned similarly. “Haggis?! Agin?! Fer a fortnight nae, that damn woman! Haggis amorra an’ I’ll be jumpin’ wit ye!”

The third worker, a Blondsman, sighed with the same dismay. “Peanut butter and jelly for a month! This is LAME, man, I’m SICK of it! One more lunch like this and I’m goin’ over too!”

The next day, to their grim despair, all three had the exact same lunches. All three loudly decried their intolerable meals and leapt to their deaths to the shock of everyone around them.

At the memorial service for the three, the Mexican man’s wife clung inconsolably to the devastated Scottish widow.

“If only I had known…I would’ve made him anything he wanted…he never said…”

“Oh, m’ dear old man…I t’ought he loved t’haggis…oh, if I’d only known…”

After a few moments, they turned their sympathetic, tear-stained faces to the Blondsman’s widow, sitting stonily off to the side. Eventually, she met their sorrowful gazes, and said

“Hey, don’t look at me, he made his own damn lunch.”

Capitalist Lion Tamer (profile) says:

Parenting vs. Happiness

I’m echoing mook up above here, but to the non-parent, nothing about parenting would seem that it would bring happiness. But it does, in a really intangible way.

I remember talking to a co-worker a few years back about parenting. He stated he would never want kids because he would have to give up too many things that made him happy.

I felt the same way before I had kids. I used to DJ. I could spend unlimited hours in front of my PS2. But when I did have my first child, it all changed. And I did too. I missed my free time and hobbies, but my idea of happiness changed as well, becoming entwined with the happiness of someone else.

Let’s face it: most of the time, you’re nothing more than a paycheck/laundromat/diner/chauffeur. You give up a LOT of stuff to be a parent. And you’re flying blind the whole time. No matter how many books you’ve read or parenting websites you’ve visited, you still have no idea what the hell you’re doing.

There’s too many variables to nail down the best solution to every problem. You take in as much info as possible and when situations arise, you’re still stuck with further questions, like “What if it’s already on fire?” or “At what point does using a non-wet/dry vac as a wet/dry vac void the warranty?”

The other weird dichotomy is the act of parenting itself. Your final goal is to raise your kids to be self-sufficient and strike out on their own, preferably as close to age 18 as possible. And if that’s what we’re aiming for, why is the first day of school so paralyzing? This should be the first step of a long journey but instead it feels like you’re throwing your kids to the wolves.

The world’s a nasty place and you know that you cannot possibly protect them from anything, but all day long you die a million tiny deaths imagining them being faced with their first face-to-face insult or some inadequacy being pointed out or them getting shoved down the slide or whatever, and you’re sure by the time they emerge from that first day, they’ll be bloodied, humbled and well on their way to cynical burnout.

You slowly get over that. But the fear still remains. And it’s such a helpless feeling. You CAN’T protect them. They need this autonomy. And you know they need this. It KILLS to let go.

I think what kids do for parents in terms of happiness doesn’t have anything to do with behaving and perfect manners and good grades. Those are nice because they ease the pressure. I think what they do is humanize you again. ]

All week long you’re a paycheck. You do what you have to do to take care of them. It’s thankless. You never see much of a payout. But once in awhile, they do the small things that make you remember what you were before you took off on your own.

You catch a glimpse of pure wonder in their eyes and the reflection thrills you. It reminds you that life can sometimes be amazing, even in nearly immeasurable ways.

You get reminded that not every problem is actually a problem. You spill a glass of milk and get pissed off at yourself or the glass or the thing you must have slipped on or whatever. They laugh their asses off, and you think maybe this is actually the way to handle the millions of small errors that only seem to make your life more complex.

My boys are 4 and 6 and small things about them make me proud for the strangest reasons. They both use “junk” to refer to their crotchal region. I think that’s hilarious. And probably inappropriate. But I also find it easier on the ears than any sort of babyish term. Plus, they’ve speculated on mom’s lack of “junk,” so that’s amusing.

They one took small blue post-its and stuck them to their eyebrows and told me they were Milhouse. My youngest refers to people as “pipeline jerks.” (You’ll have to play Just Cause 2 to get that one.) They seemed genuinely concerned about me when I got tendonitis in my knee. Almost as if I were on death’s door.

So I think that’s the key. They give a little life back to you. They make take a ton of time and energy, but they return a spark you wouldn’t see if you didn’t have them. I never thought I’d be married and have kids. I didn’t see the point. But now I can only imagine how quickly my soul would rip apart if they were suddenly gone. I would go from 0-suicidal in under a day.

They are my life now. And as horribly co-dependent as that sounds, I’m happier than I’ve ever been.

PRMan (profile) says:

Happiness and joy

We have a word for what they are saying: joy.

Money makes you happy, but often robs you of joy, because you end up being more selfish.

Doing the altruistic or right thing gives you more joy, even if you don’t make as much money and are not as happy in the moment.

Kids give you joy. A rewarding career gives you joy, even if it is stressful every day and you work way too hard.

Taking a drug may make you happy, that’s why people do it. But being a druggie is a great way to sap you of all your joy.

Marcus Carab (profile) says:

Re: Happiness and joy

The specific word is not really what’s important. A commenter above said the same thing as you about kids, but decided to use “happiness” for the really good stuff and “fun” for the more fleeting stuff.

So I say, everyone call it what you will! What we can certainly all agree on is life and its experiences cannot be measured on a single scale.

Marcus Carab (profile) says:

Re: Re: Re: Happiness and joy

Dear Me,

Sorry if I sounded self-righteous there. It’s pretty hard to have a conversation about philosophy, sociology and semantics without waxing a tad lyrical. I hope PRMan didn’t feel the same way – I totally agree with his point, but I also think that words resonate differently with different people and thus the labels are less important than the general concept that everyone seems to agree on.

The Real Me

P.S. if you see that dumb troll with the red snowflake around, tell him I think it’s amusing when someone too scared to identify themselves tries to play childish impersonation games with people

hmm (profile) says:

Put simply:

If you don’t have the imagination to have fun with what you already have, you are unlikely to suddenly gain the ability just because you have more money.

A bored person sitting there without money is going to be a bored person sitting in a slightly more expensive house…

This is why SOME (not all) that come into large sums go “off the rails”…..they thought that with money suddenly comes the knowledge and ability to use it wisely.

Terence T (user link) says:

Pleasure vs Happiness vs Contentment

I think that one of the biggest mistakes that studies like these (and to a certain extent modern Western societies) make is by equating ‘happiness’ to ‘pleasure’, and by restricting ‘pleasure’ to ‘sin’. When an evening has nice weather, it is pleasant out, and it gives one pleasure to feel it. Happiness is closer to contentment than pleasure, and does not come from money. Pleasure comes from money, and comfort, and a full stomach, and warm covers. All of it is pleasure (which stems from material experiences), not happiness (which comes from non-material / psychological / emotional / spiritual experiences).

Andrew D. Todd (user link) says:

A Different View.

Well, the extreme opposite view was stated by Andre Zirnheld, a sometime high-school philosophy teacher, and later, Free-French soldier, who was killed in 1942, aged 29, during a commando raid in North Africa.


I’m asking You God, to give me what You have left.
Give me those things which others never ask of You.
I don’t ask You for rest, or tranquility.
Not that of the spirit, the body, or the mind.
I don’t ask You for wealth, or success, or even health.
All those things are asked of You so much Lord,
that you can’t have any left to give.
Give me instead Lord what You have left.
Give me what others don’t want.
I want uncertainty and doubt.
I want torment and battle.
And I ask that You give them to me now and forever Lord,
so I can be sure to always have them,
because I won’t always have the strength to ask again.
But give me also the courage, the energy,
and the spirit to face them.

I ask You these things Lord,
because I can’t ask them of myself.

Gene Cavanaugh (profile) says:


“…perhaps people are starting to realize that the important things in life are not short-term happiness, but longer-term contentment.”
Bingo! I have relatives who watch TV a lot (nearly all day in some cases). I don’t, I am doing stuff; so they would definitely say (and often I would agree) they are “happier” at that moment.
But at 80, I am healthier, more active, and stronger than they are in their 60’s virtually never sick, and very, very content.
They have all sorts of problems, tire easily, and act in ways that I would classify as “unhappy” – criticize, whine a lot, envy (such as me on my health and easy-going nature).
Who is really happy here?

Justine says:

Money can create security.

Money can certainly free you form many unpleasant things like hunger, cold, preventable illness and death. Knowing you can pay the rent or the heat removes a lot of stress from one?s life. Frankly, I am grateful that I will never know what it is like to lose a child because I can?t afford to buy an antibiotic.
On the other hand I think of the supper rich like the former heads of the Adelphia, Enron, WorldCom, and Tyco who were clearly brought to destructive behavior by their fortunes and desire for more. The Rigas family that headed Adelphia had it all by most standards but they had wasn?t enough. The head of the company and the family received a billion in loans from there already over leveraged company to buy things like a $6000 shower curtain, a $15000 umbrella stand, and mutli-million dollar golf courses. They were driven into prison by their desire to have more.
In the end one more yacht, one more vacation home, 1 more supper car, or 40k hand bag is not going to make you any happier. What is really scary is that the people at the top are absolutely convinced it will. This general and very unsatisfying greed of our leaders has caused a string of corporate scandals in the last two decades. Additional, we are seeing some of the worse wealth distribution in the country in almost 100 years. During the last economic upswing 70% of the newly created wealth went to the top 2% while most Americans watched their benefits and salaries diminish. I think more and more Americans will know the sadness of not being able to provide proper food, clothing, housing, and education for their families. While the rich will remain in the hollow of never having enough.
Winning the lottery will not fix your problems. If anything it will create more. But, making a decent salary certainly makes life easier.

Justin (profile) says:

Lottery Winners Prove Your Point

There have been several studies done evaluating the happiness of lottery winners after they have experienced the life-changing experience of winning millions of dollars. Surprisingly (and to the point of the article above) the studies show that lottery winners are less happy post-million. One study even found that lottery winners had more difficulty adjusting to their new status than accident victims who became paraplegics.
I read a book recently called “You Never Know” which was inspired by these studies, where the author ( explores the impact of both good luck and bad luck on a person and which elicits the most rewarding experience. It is a fascinating look into human psychology and echoes the view that perhaps rewarding experiences lead to “happier” lives more so than having lots of money or an easy life.

Lilian Duval (profile) says:

Re: Lottery Winners Prove Your Point

Justin, I’m the author of the novel “You Never You,” discussed in your post above. In a few words, you have expressed one of the most important points of the book. I’m delighted that this message comes through.

The novel was just published this month (March 2011), and early response shows that you and I are not the only ones who reflect on the effects of luck on our lives.

If you’d like to post your remarks on my Amazon or Barnes & Noble pages, here are the links:

You can reach me at

Thanks for reading and analyzing!

Lilian Duval

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